Here's my Top 10 links from around the Internet at 11 am in association with NZ Mint.
I welcome your additions in the comments below or via email to bernard.hickey@interest.co.nz.
I'll pop the extras into the comment stream. See all previous Top 10s here.
My must read today is #3, which is a provocative view on the growth of open source work and its threat to capitalism.
1. Saving capitalism from itself - Nobel Prize winner Joseph Stiglitz, who we've interviewed on interest.co.nz, is trying to save capitalism from itself.
He compares his views to those of Keynes during the 1930s.
People forget that many democracies faced urgent threats at that time of communism, because of the perceived failure of capitalism.
Now Communism is also seen as a failed option.
But what will be proposed in the place of the Ayn Rand version of hyper-free market capitalism that the world opted for over the last 30 years?
Stiglitz makes some good points in this interview on BusinessLife.
The way I see it is a little bit like the way I see Keynes. He was trying to save capitalism from the capitalists. Had Keynesian economics not succeeded in showing that you could restore near-full employment, the attacks on capitalism would have been virulent. Had the so-called “capitalists” had their way and engaged in budget cutting, there would be no capitalism. I guess I feel a little bit the same way…
I view the market as an instrument. I think it’s a very powerful, effective instrument, but it can be used for good or evil. It has to be shaped to be used for the positive, and the shaping is a political process. I think the anti-capitalists who are seeing the adverse effects typically don’t have an alternative instrument. All they see is that capitalism as it is being used leads to outcomes that they find unacceptable. To some extent I agree with them, but I don’t blame the tool. You can use a hammer to kill somebody, but it’s still a hammer that can be used to build a house. You don’t destroy the instrument, you ensure it’s used the right way.
2. Will capitalism survive value abundance? - Al Jazeera that Open-source software, shared innovation and crowd-sourced manufacturing threaten capitalism as we know it.
Well worth a read. Not sure I agree, but it opened my eyes to the 'free' economy.
Where there is no tension between supply and demand, there can be no market and no capital accumulation. What peer producers are doing, for now mostly producing intangible entities such as knowledge, software and design, is to create an abundance of easily reproduced information and actionable knowledge.
This cannot be directly translated into market value, because it is not at all scarce - it's over-abundant. And this activity, moreover, is done by knowledge workers, whose ranks are steadily expanding. This over-supply threatens to make knowledge workers' jobs precarious. Hence, an increased exodus of productive capacities, in the form of direct use value production, outside the existing system of monetisation, which only operates at its margins. In the past, whenever such an exodus occurred - of slaves in the decaying Roman Empire, or of serfs in the waning Middle Ages - that is precisely the time when conditions were set for major societal and economic changes.
Indeed, without a core reliance on capital, commodities and labour, it is hard to imagine a continuation of the capitalist system.
Here's Felix:
I would never encourage speculating on the art market: it’s a rigged game, which you’re almost certain to lose. But if you really want to do it, here’s a tip: buy work which (a) is instantly recognizable as coming from the artist in question; (b) looks great when hung on the wall of an expensive apartment, and (c) comes from a fecund artist with a massive output. Oh, and if you can, get a painting with lots of red in it.
And remember, you’re not buying great art, or art you particularly love. You’re second-guessing, buying the kind of art you hope that billionaires are going to covet in the future. It’s a pretty soul-destroying exercise, with a low probability of success. But if you’re the kind of person who marks your art collection to market, you probably don’t have much of a soul to begin with.
4. 'Everyone knows the Spanish are lying about the figures' - Kiron Sarkar writes at The Big Picture about the pain in Spain.
Spain simply cannot meet its targets – unemployment is currently 23.2% and around 50% for under 25′s and forecast to get even worse. Its economy is imploding, in particular, given its previous reliance (estimated at 25% of GDP) on construction – which will not come back for many, many years.
Whilst I have a great deal of sympathy for Mr Rajoy, in particular given the serious economic and fiscal problems he has inherited from the previous administration (his administration has already agreed to E15bn of additional cuts in expenditure/tax increases and introduced labour reforms, since coming into power at the end of last year), his sense of timing is truly amazing, to say the least.
Unnamed, EU/German officials are less generous. Senior EU/German sources state “Everyone knows that the Spanish are lying about the figures” – a response to the allegation that the current Spanish administration has inflated the 2011 budget deficit, so as to get a more sympathetic hearing on this years increased defict. However, continued austerity without growth is unsustainable – economically, financially and/or politically, irrespective of German views.
5. China's free trade duplicity - Forbes' Gordon Chang reports China's government has issued an edict saying government departments can only buy Chinese brands of cars.
The Chinese central government has decided to take on foreign brands—and especially the luxury models—in a direct manner. At the end of last month, the Ministry of Industry and Information Technology posted a proposed list of brands that state units may purchase. There were 412 of them, none of them foreign. The list is open for public comment until March 9. Foreign-branded cars account for about 70% of the overall Chinese car market and around 80% of government purchases.
The Ministry’s list is just another effort to undermine foreign brands. Late last December, Beijing announced a cut back in approvals for foreign companies to build plants, and we can be sure there will be further restrictions unfairly aiding local manufacturers. In more candid moments, foreign car executives will say they expect a punishing regulatory environment in China in the next few years.
6. Iceland's debt relief - Bloomberg reports Iceland is proving that debt relief for households and defaulting on foreign (bank) debts was the best solution to its crisis.
The island’s steps to resurrect itself since 2008, when its banks defaulted on $85 billion, are proving effective. Iceland’s economy will this year outgrow the euro area and the developed world on average, the Organization for Economic Cooperation and Development estimates. It costs about the same to insure against an Icelandic default as it does to guard against a credit event in Belgium. Most polls now show Icelanders don’t want to join the European Union, where the debt crisis is in its third year.
The island’s households were helped by an agreement between the government and the banks, which are still partly controlled by the state, to forgive debt exceeding 110 percent of home values. On top of that, a Supreme Court ruling in June 2010 found loans indexed to foreign currencies were illegal, meaning households no longer need to cover krona losses.
Iceland’s approach to dealing with the meltdown has put the needs of its population ahead of the markets at every turn.
Once it became clear back in October 2008 that the island’s banks were beyond saving, the government stepped in, ring-fenced the domestic accounts, and left international creditors in the lurch. The central bank imposed capital controls to halt the ensuing sell-off of the krona and new state-controlled banks were created from the remnants of the lenders that failed.
7. Jamaica wants a Greek-style bailout - Bloomberg reports Jamaica wants some of that Greek bailout magic...
Lord have mercy indeed.
“If they could give a bailout like Greece, lord have mercy, you would see Jamaica grow and flourish,” Prime Minister Portia Simpson Miller, 66, said in an interview yesterday in Montego Bay. “The European countries got together and tried to do something so that they can give some serious aid to Greece. We know we would never be able to get the same level as Greece, but if we could get some consideration from countries or the IMF, we would be on our way.”
8. Where the money went - Economist blogger Miles Corak points to UC Berkeley research showing that in the first year of the US economic recovery the top 1% of income earners accumulated 93% of the income growth during that first year.
“In 2010, average real income per family grew by 2.3% … but the gains were very uneven. Top 1% incomes grew by 11.6%, while bottom 99% incomes grew only by 0.2%. Hence, the top 1% captured 93% of the income gains in the first year of recovery. Such an uneven recovery can help explain the recent public demonstrations against inequality.”
You betcha'
9. What a Greek default means - The Institute of International Finance issued a secret memo warning financiers what a disorderly default and exit from the Euro zone by Greece would mean. The trillion number is mentioned.
It's blood curdling and may make it worthwhile for the powers-that-be to cut a deal with the hold outs on the Greek debt exchange known as PSI. HT Zerohedge.
"It is difficult to add all these contingent liabilities up with any degree of precision, although it is hard to see how they would not exceed €1 trillion."
In other words, hold out at your own peril. Of course, what the IIF does not understand, is that for hedge funds it is precisely this kind of systemic nuisance value that makes holding out that much more valuable, as they understand all too well that they have all the cards on the table. And while a Greek default could be delayed even if full PSI was not attained by Thursday, it would simply make paying off the holdouts the cheapest cost strategy for the IIF, for Europe and for the world's banks.
10. Totally Jon Stewart on America's economic recovery and what it means for Fox News.
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.